Thursday, October 6, 2022
In moving to shorten the U.S. securities settlement cycle by one day to T+1, the Securities and Exchange Commission appears to have hit on something upon which virtually everyone can agree. Judging by the comments to the SEC's T+1 proposal, everyone from State Street to the Cornell Securities Law Clinic agrees that moving to T+1 is both desirable and beneficial to risk management in the long run. That said, despite this rare moment of accord between the regulator and the regulated, according to some commenters, some parts of the proposed implementation need attention, fine-tuning, or reconsideration.
Categories: All, Change Overview and Rationale, Formal Regulatory Remedies, Cross-Post
Tags: securities lending, Risk Management, SEC, ICI, De-risking, ADRs, RMA, T+1
Friday, September 30, 2022
In February of 2022, the Securities and Exchange Commission proposed new disclosures to provide more transparency into institutional investors' short-selling activity. According to Chairman Gensler, collecting more granular data from large short sellers "would help us to better oversee the markets and understand the role short selling may play in market events." Despite these lofty goals, industry commenters are raising serious questions about whether some elements of the proposed new disclosure regime are structurally and technologically feasible.
Categories: All, Change Overview and Rationale, Disclosure Regimes, Formal Regulatory Remedies, Cross-Post
Tags: securities lending, short selling, dodd-frank, SEC
Thursday, April 28, 2022
The Securities and Exchange Commission (SEC) filed a civil lawsuit against Archegos Capital Management, its founder, and several other individuals in April 2022. The SEC alleges that Archegos engaged in a fraudulent scheme to manipulate the market for the securities of the issuers that represented Archegos's top 10 holdings, both through purchases of the issuers' securities and entry into total return swaps referencing those issuers. This event has led investment firms on both the buy and sell sides to reconsider how they manage counterparty and market risks and how they will structure their future securities financing and liquidity management strategies.
Categories: All, Change Overview and Rationale, Cross-Post
Tags: Derivatives, Counterparty
Monday, April 18, 2022
The Securities and Exchange Commission's controversial securities lending disclosure proposal (Proposal) sought public input on 97 questions and received a substantial body of feedback during the initial 30-day comment period. Drawing sharp rebukes, most responses from trade associations for lenders and borrowers focused on the ambiguous scope of rule 10c-1, the feasibility of the proposed 15-minute reporting regime, lopsided cost and technology burdens, and the risks of reverse engineering posed by the public disclosure provisions. Acquiescing after a month of consideration to the desires of a host of commenters for more time to respond, the Commission extended the Proposal's comment period from January 7, 2022, to April 1, 2022. The securities lending industry took advantage of the extra time to amplify prior criticisms and raise new issues with the Proposal, giving the SEC yet another earful.
Categories: All, Formal Regulatory Remedies, Procedural Changes, Cross-Post
Tags:
Thursday, March 3, 2022
On Friday, February 25, 2022, the Securities and Exchange Commission (SEC) proposed its latest round of GameStop rule proposals. In addition to enhanced public disclosures of short sales by institutional investors, the Commission announced a 30-day extension of the comment period on its sweeping securities lending disclosure proposal, Rule 10c-1, and technical amendments to the "consolidated audit tape" regulations. These separate, but related, disclosure proposals may well be the start of a much broader and far-ranging regulatory response to the kind of market disruptions epitomized by the Gamestop event.
Tags: securities lending, short selling, SEC, T+1